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Friday, April 10, 2015

SPX and INDU: Potential Whipsaw Looming

There's no material change from last update, and the last couple sessions had the overlapping feel of a fourth wave. The near-term pattern has left itself a couple options.

I'm sorely tempted to favor the path shown in black on the chart below, but it's almost TOO complex a pattern for me to simply come out and say "here's what's gonna happen." Frankly, the last overlapping wave is extremely difficult to count (difficult even for a fourth wave). The blue path represents the more conservative course, but keep a very close eye on the potential for SPX to roughly follow the black path.

The black path could see a "pop and drop" open, but the "pop" part isn't required. As of the moment of this writing, futures are up a few points, but that may or may not stick, of course.

The big picture options remain as previously noted:

INDU's simple trend line chart also remains unchanged, with sustained trade north of 18,008 still the next hurdle for bulls to reach the red circle:

In conclusion, there is one decent near-term option for a continuation of the confusing chop we've seen over the past couple sessions -- this is represented by the black path on the first SPX chart, and that pattern would see at least two whipsaws in the immediate future. The more conventional option (blue path) would simply head up to the target area while unwinding a couple small fourth waves along the way.

Bigger picture, at present we still have to give an edge to the bears, because the near-term waves still fit better with the bear counts, and so far there have been no real surprises. I've outlined the bear arguments in detail for the past couple weeks, but I will continue tracking the bull options, because the fact is, we've been in a bull market for six straight years. That's the essence of the bull argument right there -- but six years of bull market does mean that bearish stances are ill-suited to complacency. For now, though, we'll just keep the bull counts on the back burner until bulls start showing more than the expected levels of strength. Trade safe.

2 comments:

I've tended to favor the "blue" count myself, and hadn't considered the black alternate count...but can see that as a distinct possibility. I think we are indeed in a 4th wave correction that seems to be unfolding as some sort of complex flat. I guess we'll know in a few days/weeks when the market reveals it's intentions.

BTW, took the "donation" route to get approved for the forums. Still showing the "RockyTheWonderGeek, your account is currently awaiting admin activation" message.

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